IndiGo Q1 net plummets 97% on forex loss, high fuel prices
InetrGlobe Aviation, which runs largest domestic carrier IndiGo, today reported a steep 96.6 per cent fall in net profit to Rs 27.8 crore in June quarter, owing to adverse impact of foreign exchange, high fuel prices, lower yields and higher maintenance cost.
The Gurugram-based budget carrier had posted a net profit of Rs 811.10 crore in the same quarter last year.
However, sales from operations rose 13.2 per cent to Rs 651.20 crore in the quarter, compared with Rs 575.29 crore in the year-ago period.
For the quarter, the passenger ticket revenues stood at Rs 576.94 crore, an increase of 13.6 per cent over the year-ago period, and ancillary revenues rose 16 per cent to Rs 68.27 crore.
"The profit during the quarter was primarily impacted by rupee depreciation, increase in fuel prices, continuous pressure on yields and increase in maintenance cost," said Rahul Bhatia, co-founder and interim chief executive officer, IndiGo, during the post-earnings analysts call.
Total expenses for the quarter jumped by 40.5 per cent year-on-year to Rs 678.70 crore, while fuel cost shot up by 54.5 per cent to 271.56 crore, from Rs 175.92 crore in the year-ago period.
Besides, yields or average ticket price dropped 5.4 per cent to Rs 3.62 per km in the June quarter, against Rs 3.83 per km in the same period last year.
"The current revenue environment continues to remain weak, particularly in the 0-15 days booking window. The fares continue to be lowest in the quarter compared to the same period last year. We don't believe that these type of fares are sustainable, especially given increase in input costs," said Bhatia.
The load factor surged 1.3 per cent to 89.3 per cent in the quarter, against 88 per cent in the year-ago period.
"Clearly, with the industry load factor in the high 80-90 per cent range, the industry is turning with passenger demand at the current fare levels, but we have no choice but to keep our fares competitive," he added.
During the quarter, IndiGo added two new destinations - Hubli, the first destination under the Udan scheme, and Trichy - besides staring nine new routes.
This brought the number of total destination to 52, including eight abroad.
"While we remain focused on building our domestic network, we are also opening up new destinations in India and internationally. With our existing fleet and new A320 Neos that we expect to start getting towards the end of the year, IndiGo will have the capacity to reach cities in China, the middle-east and South-east Asia," said Bhatia.
He said the airline has also secured traffic rights for cities like Abu Dhabi, Kualalampur, Kwait, Male, Jeddah and Hong Kong.
"We are evaluating all such opportunities to expand our network," he added.
IndiGo received credit from its manufacturers this quarter to offset some of the adverse impact for aircraft grounding and delayed deliveries, airline's chief financial officer, Rohit Philip, said.
"The rupee depreciated significantly during the quarter and closed at Rs 68.44 against US dollar based on which we booked a foreign exchange loss of Rs 2.5 billion compared to a gain of Rs 66 million during the quarter a year-ago," he said.
"We continued to face competitive fare environment in the industry and despite the increase in fuel prices, while our load factors are up, our yields are down year-over-year.
The impact of the lower yields on our profits was USD 3.3 billion. We don't believe that the current revenue environment is sustainable given the increase in input costs,"said Philip.
Also, the airline had an increased number of shop visits this quarter for engines pertaining to its older A320s, which resulted in an increase in the maintenance cost.
"As we start getting larger A321 Neos, our unit cost will further reduce. We are strengthening our balance sheet by purchasing aircraft with free cash. We purchased three more ATRs during the quarter and have a total nine ATRs purchased so far," he said.
The airline's total debt in the books was Rs 2,500 crore at the end of June quarter, while the cash balance was Rs 13,200 crore, comprising Rs 6,100 crore of free cash and Rs 7,100 crore of restricted cash, as per the airline.
The company's stock ended 0.23 per cent lower at Rs 1,004.25 apiece on the BSE today, against 0.42 per cent jump in the benchmark.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.